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CME: FI Cattle Slaughter Up from Prior January

28 February 2018

US - USDA's National Agricultural Statistics Service (NASS) released meat production and livestock slaughter data for January last Thursday, according to Steiner Consulting Group, DLR Division, Inc.

Cattle slaughter (Federal Inspected) was up 7.1 per cent from the prior January. Some of the increase was due to one more weekday this January than in January 2017. In absolute terms, January cattle slaughter was up 180,000 head from a year earlier. Of this increase, heifer slaughter accounted for 51,000 head and steer slaughter 70,000 head. Cow slaughter was up 56,000 head.

The increase in female cattle processed by slaughter plants raises some questions about how much cattle herd expansion can be expected this year if current trends persist. The composition of cow slaughter between dairy and "other" cows (i.e. beef cows) was skewed towards beef cows, with this category of slaughter up 16 per cent from the prior January.

Regionally, there are some year-over-year comparisons that standout. The Pacific Northwest, while not a prominent region for cow slaughter (less than 10 per cent of US total), almost doubled its volume of total cow slaughter and beef cow slaughter was up 400 per cent.

The Western Cornbelt increased beef cow slaughter by 16 per cent, in line with the US total. The Southern Plains, inclusive of the Ozark Plateau, processed 13 per cent more beef cows than the prior January, which is worth monitoring in up coming months given the drought conditions that have been developing in western areas of that region.

The January increase in heifer slaughter follows a year with the biggest annual increase in heifer slaughter since 1976. Although the 2017 total heifer slaughter was nowhere close to a record, heifer kill in past years that was only 10 per cent higher than in 2017 could also be tied to years when the US cattle population declined.

Increases in heifer slaughter will be easier for the first seven months of 2018. The big increases last year came from August to the end of the year, which will make gains in those months of 2018 more challenging. Calf prices during the last 4-5 months have been 10-20 per cent higher than twelve months earlier and should be a factor limiting heifer slaughter later this year as decisions about breeding stock retention become more important.

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